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Germany on Wednesday called on companies to show "sensitivity" if they choose to do business in Iran after a German-Iranian gas deal drew sharp criticism from Israel.

Berlin had not levelled a general ban on German contracts with Iran, but was urging firms to take all factors into account before deciding to work with the Islamic republic, deputy government spokesman Thomas Steg said.

"We warn companies of the extremely sensitive nature" of economic ties with Iran, he told a regular government news conference, adding that Berlin also expected firms to employ their "moral sense" if they invest there.

The Israeli government last week expressed concern over a €100-million ($155-million) deal between Germany's Steiner group and Tehran to build three liquefied natural gas plants in Iran.

Steg said that because the deal did not violate international sanctions against Tehran over its nuclear programme or fall under German regulations requiring a government review, Berlin had not had to give its authorization. But he called on companies to display "sensitivity" in the contracts they pursued.

Germany is one of Iran's biggest trade partners. Its exports to Iran totalled €3.6 billion last year. But Berlin is working with Western powers to convince Tehran to abandon sensitive nuclear work. It has reduced export guarantees with Iran, and German banks have largely ceased doing business with the Islamic republic over its nuclear programme.

French energy giant Total had won a contract for work at Iran's sprawling South Pars gas field including the construction of a gas liquefaction plant that Tehran intended to use for energy exports.

But last month, the group announced it would suspend investment in Iran because it was politically too risky. Israel, the region's sole if undeclared nuclear armed power, considers Iran its greatest threat.